The Observer is launching a campaign to change the way cash Isas are transferred in response to a deluge of letters from panicked savers who have been left without access to their cash.

The problem has affected so many people that Vince Cable, the Liberal Democrat Treasury spokesman, has written to the Financial Services Authority and the bosses of Britain's banks, accusing them of 'another bank charges scandal'.

Record amounts of cash have been switched between Isas as thousands of people move savings from their existing Isas into new market-leading ones in an effort to stave off the effects of the credit crunch. At the same time, banks and building societies, keen to secure more funding from customer deposits, have been offering the best interest rates for years. Yet many of those switching are finding that the money disappears from their current provider but does not turn up with their new one for weeks.

Others have given up trying to transfer altogether after months of delays. 'They [the banks] are pocketing money by being inefficient and avoiding paying interest,' said Cable. 'They already have the worst clearing process in Europe and are adding to the problem with these slow transfers.'

The problem stems partly from the outdated transfer process: banks still rely on writing each other cheques rather than moving money electronically. Internet bank Icesave said it was 'standard practice for funds to be transferred by cheque' for 'security purposes'. However, Revenue guidelines say there is no reason for cheques to be used and it has written to banks and building societies to remind them of this. 'We have no objection to electronic transfers,' said a spokesman.

The British Bankers' Association did not respond to Cable's letter, but Hector Sants, chief executive of the FSA, replied to say he had spoken to Tisa, the trade association for Isa providers. 'They agree that there is no reason this process cannot be changed to electronic transfer. They are currently in talks with member firms to move this forward,' he added.

But the banks and Tisa say a switch to electronic transfers is a 'long-term aim'. The Observer would like it made a priority and for compensation to be paid to savers who have lost out on interest through the delays. We want to hear from readers who are experiencing problems transferring and from those who support our campaign by emailing us at the address at the end of this article.

Nationwide has been the worst offender, based on correspondence The Observer has received since we first wrote about the problem three weeks ago. We sent the building society a number of complaints about Isa transfers and asked for explanations. Last Monday, Nationwide responded by saying it has now closed its cash Isa to anyone transferring money in an effort to stem the complaints. 'We have seen an unprecedented increase in the number of Isa transfers into the society,' said a spokeswoman. 'During the first three months of this financial year alone, volumes have been almost 400 per cent up on last year. Our resources are being stretched, but we are writing to all those who are stuck in the system.'

Revenue guidelines also state that the transfer process should be carried out within 30 days. But some banks and building societies are manipulating this rule: instead of the whole process taking 30 days, they are interpreting the guideline to give them 30 days to contact each other before the transfer even begins.

One saver, Ravinder Matharu, transferred his Isa from NatWest to Alliance & Leicester on 1 April, but the money has only just gone through. 'I was under the impression this would take 30 days to complete, but after about six weeks this was still not done,' he says. 'I was unable to gain access to my savings.' The FSA will not step in to deal with the chaos because it does not regulate Isa transfers. Isas also fall outside the Banking Code, which is designed to protect consumers. Savers can complain to the Financial Ombudsman (financial-ombudsman.org.uk; 0845 080 1800), but only after they have exhausted their bank's or building society's eight-week complaints process.

Banks and building societies met for the second time in a week last Wednesday to seek a solution. The system is in such a mess that one of the country's biggest Isa providers has written to the Revenue asking it to consider a system where savers are given an 'Isa certificate', which would effectively allow them to transfer the money between banks themselves.

Case study

David Murphy from Belfast applied to move his one-year fixed-rate Isa from NatWest to Nationwide on 17 April. His money left NatWest on 16 May but has still not arrived in his new account almost two months later. Nationwide has not responded to three letters he sent. 'I don't know where the money is,' Mr Murphy says. 'If I wanted to get hold of it would I even be able to?'

He returned to his branch to ask about the delays and was given a phone number. 'When I asked the staff member I was talking to if she could call, she said: "They don't answer the phone to us." '

Mr Murphy wrote to The Observer last week for help and Nationwide has now promised to sort things out. 'It is interesting that a letter from the society enclosing a form of authority for me to sign, allowing your paper to discuss details of my account, arrived a few days after you spoke to them, yet I have still had no response to any of the letters I sent them,' he says.

Charlotte Sjoberg of the Nationwide says: 'Customer service is important to Nationwide so we are very disappointed when we fall short of our customers' expectations and our own high standards. Therefore I would like to take this opportunity to apologise to Mr Murphy and any of your readers for the inconvenience they've experienced.'